The Internal Revenue Service acknowledged Friday that it had inappropriately targeted conservative political groups for additional scrutiny during the 2012 election cycle, an admission that set off a firestorm on Capitol Hill and could damage the Obama Administration.

Lois Lerner, the official in charge of the IRS division that oversees tax-exempt groups, revealed the move Friday at a conference sponsored by the American Bar Association in Washington. Lerner said organizations whose names contained the phrase “tea party” or “patriots” were selected for additional reviews of their 501 (c) (4) tax-exempt status as social welfare groups.

“That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate,” Lerner said, according to the Associated Press. “That’s not how we go about selecting cases for further review.”

In a conference call with reporters Friday afternoon, the agency said the errors were limited to a group of IRA workers in its Cincinnati office, who singled out 300 applications for tax-exempt status for review. One-quarter of those were conservative groups. None of the groups had their status revoked, but some withdrew their applications in the face of requests to divulge their donors. “Mistakes were made initially, but they were in no way due to any political or partisan rationale,” the IRS said in a statement. “We fixed the situation last year and have made significant progress in moving the centralized cases through our system.”

Workers were looking for signs that the groups were primarily focused on political activity, which would have violated their tax status. Campaign finance groups have long complained that political groups have improperly received tax-exempt designations despite using their money to influence elections.

The admission by the IRS was made ahead of a forthcoming report by the Treasury Inspector General for Tax Administration. It comes a year after Tea Party groups first complained they had been subjected to undue scrutiny because of their political leanings. An IRS spokesperson would not comment on whether any disciplinary actions were taken against the responsible employees.

The revelations incensed congressional Republicans and appeared to validate Tea Party complaints. “The fact that Americans were targeted by the IRS because of their political beliefs is unconscionable,” Representatives Darrell Issa and Jim Jordan said in a statement. Issa, the chairman of the House Oversight and Government Reform Committee, vowed to begin a probe that would “hold responsible officials accountable for this political retaliation.”

“The IRS has demonstrated the most disturbing, illegal and outrageous abuse of government power,” said Jenny Beth Martin, national coordinator for the Tea Party Patriots. “This deliberate targeting and harassment of tea party groups reaches a new low in illegal government activity and overreach.”

The revelation didn’t sit much better with groups on the left. “Even the appearance of playing partisan politics with the tax code is about as constitutionally troubling as it gets,” said Michael Macleod-Ball, chief of staff of the ACLU’s Washington legislative office.

Senate Majority Leader Mitch McConnell called on the White House to investigate. “Today’s acknowledgement by the Obama administration that the IRS did in fact target conservative groups in the heat of last year’s national election is not enough,” he said in a statement. “I call on the White House to conduct a transparent, government-wide review aimed at assuring the American people that these thuggish practices are not under way at the IRS or elsewhere in the administration against anyone, regardless of their political views.”

White House spokesman Jay Carney conceded Friday afternoon that “there does appear to have been inappropriate action that we would want to see investigated.”